FDI - Ireland’s 50 year overnight success story

Ireland has become the prime location for US companies who are looking to expand their operations outside North America and has developed an enviable reputation for attracting inward investment or FDI. This has not happened overnight and this skill and national competence has been conceived, developed and honed over many decades, a real 50 year overnight success story. From the very first multinational corporation to locate operations in Ireland, Henry Ford in 1917 to one of the latest arrivals Squarespace. Indeed it’s become hard to keep up with all the announcements from the IDA (Ireland’s state investment agency). 2013 was a singularly great year for the agency, a record year for multinational companies with 164 projects won for Ireland, 78 from companies investing for the first time in Ireland, an 18% increase on 2012 with an increase of over 7,000 jobs.

The level of investment in Ireland by US companies is phenomenal - more capital invested in Ireland since 1990 ($189bn) than Brazil, Russia, India and China combined. Approximately one-quarter of Ireland’s GDP is from US companies. There is nowhere else in the world (outside the US of course) where there are more US multinationals and emerging companies. 70% of Ireland’s foreign direct investment comes from the US. In the first half of 2013, Ireland emerged as the third largest recipient of U.S. FDI.

Forbes described Ireland in late 2013 as the best country in the world to do business. There was some scoffing at the time in some circles but the proof is pretty evident, further bolstered by Ireland recently topping a global survey on best places to invest in Western Europe.

Some further good news is that Ireland exited the Troika Bailout without a precautionary credit line in December and international markets have reacted very positively to this exit.
Among the companies to invest in Ireland in the past year were Tyco, Amazon, HedgeServ, Deutsche Bank, Twitter, EMC, eBay, Salesforce, Novartis, Vistakon, Facebook, Zurich, Symantec, De Puy, Yahoo, Sanofi and Indeed.com which is a pretty impressive list. 10 of the top born-on-the-Internet companies have operations in the country.

Tech giants Google (Google recently celebrated ten years in Dublin) and Facebook have their international headquarters in Dublin, along with LinkedIn, Twitter, PayPal, Amazon and Zynga.

So what is it about Ireland that makes it such an attractive place to invest? And it is not just the advantageous tax system. While that is an obvious competitive advantage it is only one of many factors in a company’s decision to spend millions or billions of dollars to establish a base in Ireland. Factors such as talent, English speaking, location as part of the EU. So have so many of the world’s top companies chosen to establish bases in Ireland? We asked a few leading executives from Squarespace, Paypal, Intel and EngineYard why they selected Ireland to invest in.

Jesse Hertzberg COO Squarespace

Why Ireland?

Everything works in Ireland, low bureaucracy, not a lot of red tape, great service from the IDA as well as the government, we marvel at how easy it was. We first moved in February 2013 and 110 days later our first employee started. This is phenomenal. Being able to do this in 4 months is no accident. You don’t build this kind of capability overnight. The IDA were problem solvers for us.

20% of our business is outside the US. We needed to build out our customer care ahead of development and spend money on this. We wanted to have 24/7 global support evenly distributed, so this made it easier to provide. It’s English speaking, easy to get to with a large educated workforce. The Irish are customer service people, the people there are affable, friendly and Ireland already have a track record as a customer service hub

For us it had nothing to do with tax. We went for the people. 70% of our workforce are customer service people, this is central to our brand.

How big is Squarespace in Ireland now?

There are 35 people employed now, 100 by the end of the year and this is 18 months ahead of schedule. We have very ambitious plans for our base in Dublin. Dublin has excellent infrastructure, diversity of workforce and this diversity of people has been good for the Irish workforce I think, helps give different perspectives.
Has it been challenging to find the right people?

We had no problem getting people, we are oversubscribed. We have a great culture, flexibility and perks, our people feel lucky to be part of this family.

Brendan Cannon, Corporate Affairs Director, Intel

What is it about Ireland’s success with FDI?

Ireland competes every day for international capital that can go anywhere. This is really competitive. It requires constant analysis and Ireland and its approach to attracting FDI is best in class.

I see FDI as the real 50 year overnight success story. And Ireland was doing FDI right from the foundation of the state. In 1931 and 1932 the world was moving towards protectionism, Ireland was one of the only remaining examples of an open economy. Pre De Valera, Ireland was incredibly open. Then in the late 60s Lemass (Irish Prime Minister at that time) kicked this off again. Ireland started offering free education and then this continued with the overseas graduate sponsorship scheme. So when Intel were looking in 1989 for a place to build a manufacturing base Ireland had a base of well qualified young people around the world with international education and management experience to draw upon. We were an English speaking country, business friendly.
Why do companies ultimately choose Ireland?

Here is why Ireland wins at attracting FDI. We have a consistent and dependable business structure. So companies who invest in Ireland can make decisions based on this stability. Ireland has a multi-year system. We have a long track record of sustained excellence. Senior managers at international companies can trust Irish governments not to drastically change this policy. People know what they are investing in. This gives long term stability. There’s also a signalling effect at play. If it’s good enough for Intel, Google, Facebook, Twitter, LinkedIn etc then we better have Ireland on the list.

Intel have just made a $5 billion commitment to Ireland that underpins 4,500 jobs. And these decisions evolve over years. One thing that is often overlooked are what I call the unsung heroes of the Irish FDI success story, people like Louise Phelan of Paypal, John Herlihy of Google, Sonia Flynn of Facebook and Eamonn Synott my boss here at Intel. And all the other management teams that convince their parent companies to invest and reinvest in Ireland.

These people have the company’s and the country’s best interest at heart. They constantly preach the message about what a great place Ireland is to invest in.

Louise Phelan, VP Global Operations, Paypal

Why did PayPal choose Ireland?

PayPal chose Ireland because of the large pool of talented and skilled people to hire from. That was essential for us as we wanted to build successful teams that could drive technology and innovation advancements.

Language skills are also important for us and the fact that Ireland attracts so many people from across Europe to live and work here is also a major advantage. Other contributing factors included the world-class infrastructure in place and the pro-business work environment. Forbes just recently named Ireland as the number one country in the world to do business and that has been a real plus for Ireland Inc.’s international reputation. On top of all of this, Ireland is perfectly positioned as a gateway to Europe, the Middle East and Africa.

What competitive advantages does Ireland have?

We are privileged to have such a highly educated and flexible workforce. Our educated young people have contributed significantly to Ireland becoming such an attractive place to set up and do business in. Ireland is ranked first globally for the flexibility and adaptability of its workforce. Also, the IMD World Competitiveness Yearbook 2013 placed Ireland third for the availability of skilled labour.Ireland has also evolved into one of the world’s most important centres of technology and innovation. Our reputation and proven track record make it an easy choice for leading global multinationals to set up here. Eight of the top ten global ICT corporations are based in Ireland and we’re fast becoming the internet capital of Europe. Ireland also has the best foreign direct investment support channels in place, with the Government, the IDA and organisations like the American Chamber of Commerce all providing invaluable assistance to companies setting up here. We all work together to eliminate any challenges and barriers to entry.

How can Ireland improve? Are there skills gaps?

The prospects for Ireland will continue to be very favourable if we can remain focused on our competitiveness, and keep improving our technology and language skills. We need to ensure that any skills gaps, particularly in the technology sector, are closed. This includes promoting relevant technology skills and foreign languages to students from a relatively early age. We also need to make visas more easily available to non-nationals with relevant skills, and we also need to ensure unemployed people can easily access retraining and back to work schemes. It’s essential that we continue to invest in education to ensure we have the right skills for the next generation of companies – that is key to sustaining future economic growth. Close collaboration between industry and the education sector is vital. We need to ensure students are graduating with the necessary skills and are ‘work ready’. PayPal currently employs more than 2,050 people in our centres in Dublin and Dundalk. We are continually growing our operations here and expect to employ more than 2,500 people by 2015.

Barry O'Dowd, SVP of Emerging Business at IDA Ireland

What is Ireland's competitive advantage in this space?

Over the last two years IDA Ireland has been very successful in a attracting early stage, fast growth companies to Ireland. This has been a deliberate strategy by IDA Ireland, which is paying dividends for both the companies and Ireland. Examples include well established names such as Airbnb and Etsy. Other fast-growing companies that have recently set up include MongoDB, Squarespace, Zendesk, Hubspot, Qualtrics and Marketo. For many of these speed to market is of the essence and Ireland's business friendly environment offers a compelling solution in a multicultural English speaking location. Ireland’s cadre of senior and middle management with experience of project delivery is proving to be a differentiating competence in a highly competitive market for top talent.
John Dillon CEO EngineYard and ex CEO Salesforce

What are the reasons you decided to invest in Ireland?

It was all about good people, the main competition for us was London. But Ireland has the Euro, a common currency with the rest of Europe and a young population. The IDA do a magnificent job selling the reasons why Ireland is the place for your money. Low barriers to entry, tech savvy workforce, highly educated. The key is we could support multiple languages from Dublin. That then expanded to development, customer support and sales roles.

Initially I hired five Oracle executives to build the Salesforce business. That was key, having that senior executive talent on the ground and available. We hired 400 - 500 staff and people in San Francisco thought I was nuts. The culture is really appealing, it’s entrepreneurial, the Irish are used to working a long day. Now I’m CEO of EngineYard and we’ve invested in Ireland again and acquired a vibrant tech company in Dublin.

What advice would you give to Ireland?

My advice would be to continue to have a focus on this. Attract venture capitalists to invest in Irish companies, don’t mess with anything. This was not just Ireland passing a couple of laws and recreating Silicon Valley, this has been decades in the making.

In conclusion Ireland and the IDA in particular have a lot to be proud of. Attracting inward investment has been developed to a national competence. This is a huge achievement and is no accident. The IDA helped set up interviews with the senior executives interviewed in this piece at pretty short notice. Each and every interviewee gave up over an hour of their time to talk to us and each one spent a lot of time emphasizing the wonderful and productive relationship they have with the IDA. There you have it, an Irish government agency that is leading the way in global performance in this space. Something to tip our hats to and appreciate.

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